On Marketing, Real Estate, and Technology

From Confusion to Bizarro-Land

The NAR-DOJ settlement is the gift that keeps on giving. To a blogger at least. Well, to a blogger that happens to be interested in such an obscure and unimportant topic. 🙂

The latest piece of information is throwing me from confusion directly into bizarro-land. NAR released a “Special Report” in which it announced that it and the DOJ has agreed on MLS policy. The relevant part is this:

NAR has reached a favorable settlement with the U.S. Department of Justice, resolving the litigation between them over the display of listings from the MLS on brokers’ virtual office Web (VOW) sites. The final order, to be filed with the federal district court in Chicago today, validates NAR’s long-standing Internet data exchange (IDX) policy and strengthens the membership rules governing multiple listing services.

A. Within five business days after entry of this Final Judgment, NAR shall repeal the ILD Policy and direct each Member Board that adopted Rules implementing the ILD Policy to repeal such Rules at the next meeting of the Member Board’s decisionmaking body that occurs more than ten days after receipt of the directive, but no later than ninety days after entry of this Final Judgment.

Section V goes on to talk about implementing the new Modified VOW Policy (which was attached, and described as a Revised VOW Policy), setting up an Antitrust Compliance Officer at NAR, etc. It never mentions ILD or IDX ever again in the document.

The Revised VOW Policy mentions the term IDX exactly once, under section I. Definitions and Scope of Policy:

NAR has adopted a new policy to govern the display of MLS listings on the Internet. This new policy, Internet Listing Display (ILD),replaces NAR’s Internet Data Exchange (IDX) and Virtual Office Website (VOW) policies, and is effective immediately. MLSs have until July 1, 2006, to adopt the new policy.

This Internet Listing Display policy was specifically repealed by the Final Order.

So… NAR’s “Special Report” basically says this:

The Final Order validates NAR’s longstanding IDX policies by repealing them specifically, by name.

Lest anyone thinks this is just an unimportant little piece of legal trivia, we’re already hearing very confused things at OnBoard (my employer). While I don’t like to mix the day job and blogging, in this case, it’s extremely relevant. We’re hearing from clients that they believe this settlement affects them, despite the fact that they do not operate a VOW. We’re getting questions on whether this settlement affects them, and in one case, we have a client who believes he is now completely freed of all IDX rules.

I went searching for the old IDX Policy, circa 2000, and couldn’t locate it. But I did find ARMLS (Arizona MLS) IDX Policy of 2006 online, and there are provisions like these:

11. The name of the real estate brokerage that has the property listed must be displayed on the screen and in printed reports for each property where the property information is presented in a “Full View.” The real estate brokerage name must be displayed in the same font size as the listing information. For purposes of this policy, “Full View” means the display of listing information that includes seven or more data fields.

12. An IDX Broker may not modify, enhance or manipulate a Shared Listing. In addition, listing information from other sources may not be combined with IDX Listings. For instance, property listings from other multiple listing services, for sale by owner properties and properties not in the MLS may not be combined with the IDX Database.

Right now, it is not at all clear to me that someone taking an IDX feed from ARMLS has to obey these rules. Maybe I can decide not to display the name of the listing brokerage. Maybe I can modify or enhance a Shared Listing, and mix FSBO listings with the IDX listings. Even if the Revised VOW Policy says I can’t do those things, that only covers VOW’s, not IDX websites.

Here’s hoping that NAR acts swiftly to correct this serious gap in policy, because I can nearly guarantee that our client who thinks he is no longer bound by IDX rules is NOT alone.

I can see how there could be some confusion on this issue, but rest assured the IDX rules adopted by ARMLS and many other MLSs are still in force. When the ILD policy was adopted, it was challenged by DOJ and almost immediately withdrawn by NAR. (Enough acronyms in there? If not, here’s more.) This left the existing IDX and VOW policies, if adopted by the local MLS, in place. It did not nullify them.

ARMLS had, and still has, an IDX policy. ARMLS did not adopt a VOW policy, deciding to wait for all the litigation to shake out first. Now that it has, we may revisit the issue again, but as stated in the NAR release there has been little interest in VOWs since IDX and public displays of data are so prevalent on so many websites.

In light of the DOJ-NAR agreement, and recognizing that the landscape of data exchange and listing syndication has changed much since 2006, ARMLS will be reviewing our data policies and updating our IDX rules if needed. However, for the moment, the 2006 rules, linked to above, are still valid and in full force.

Thank you Bob for the clarification. A couple of questions, if you would indulge. 🙂

First, was the ARMLS IDX policy guided by the 2000 NAR IDX policy, or was it entirely independent of the NAR IDX policy?

if the former, wouldn’t that raise the issue that the ARMLS IDX policy is potentially invalid under the DOJ-NAR settlement?

Second, have you been in contact with the people at NAR about this issue? If so, I’d love to see what their answer to you was — and if you’d post about it somewhere, I’d be sure to link to it.

Because your third paragraph tends to cast some shadows onto the clarity of the second. If the ARMLS IDX Policy was never implicated in the DOJ action (obviously, indirectly, as an outgrowth of the original NAR IDX policy) as an anti-competitive practice, then whether DOJ and NAR reached an agreement or not is immaterial to its validity. If the ARMLS IDX policy was valid prior to the settlement, then it’s valid afterwards.

The fact that you believe ARMLS has to review your data policies and update your IDX rules strongly implies that you believe your IDX policy does fall under the shadow of the challenged NAR policies.

If that’s the case, then I’m not sure whether your current IDX policies are in fact valid and in full force. I can see making an argument that it is, but equally, I can see the argument that it is not, because the ARMLS policy was based on the challenged NAR IDX policy, which was replaced by the ILD, which in turn was just repealed.

So there are two questions here, one of fact and one of law.

The fact question is whether, as you say, the ‘suspension’ or ‘non-implementation’ of the ILD in 2005 meant that the older IDX policy remained in full force and validity. I think this leans towards a “Yes” answer, but it isn’t obvious in the absence of a firm statement by NAR. What would help this is a clarification by NAR that post-settlement (which specifically repeals the ILD), the 2000 IDX Policy is in full force and valid effect.

The law question is whether the 2000 IDX Policy is or is not anti-competitive. That DOJ went after NAR for its 2000 IDX and VOW policies, which led to NAR promulgating the 2005 ILD policy, strongly suggests that the 2000 IDX policy is also anti-competitive in the view of DOJ. That would mean the ARMLS IDX Policy may be illegal. What would help here is a clarification by the DOJ that they were really after the 2000 VOW policy, and that the 2000 IDX policy was A-OK then and is A-OK now.

Again, to my dayjob, we will be advising our clients that for the time being, they should assume that the local MLS IDX policies are in full effect, but as a member of the bloggerati commentariat, I believe the question to be unsettled.